The end of the art affair

Charles Blackman, Christabel in a Chair, work on paper. Bought for $9000 and then sold, after prices for Blackman escalated, for $130,000. “It meant that we could then use those funds to buy a much more significant work by the artist. So it was that discipline, that sort of curatorial rationale of upgrading works in the private collection so that they did become works of the highest calibre,” Smith would tell the court.

Howard Arkley, OYO Flats. Bought by Smith at a Sotheby’s auction in 1994 for $11,500, setting a new record for the artist. Valued for the court case at $150,000.

Arthur Boyd, Dreaming Bridegroom. This and Wedding Group were tracked down to a couple living in the US and bought for $100,000. Gould and Smith kept one and sold the other for $330,000.

Brett Whiteley, Bather in Garden was sold by Gould in 2006, causing Geoffrey Smith to seek court orders preventing further sales of paintings and kicking off the court case.

“Painting is not done to decorate apartments. It is an instrument of war." Pablo Picasso.

It was a painting by
Brett Whiteley
, Bather and Garden, that framed the best of times for art dealer Robert Gould. Bought for $450,000 in 2001, he sold it five years later for $1.5 million. The wave of ever-more extravagant art sales was reaching its crest and Whiteley’s curvaceous nude would be the most expensive artwork ever sold by Gould Galleries.

The sale also heralded the beginning of the worst of times. Two years earlier, Gould had split from his partner and head curator of Australian art at the National Gallery of Victoria, Geoffrey Smith, and the bruising separation was about to turn litigious. News of the Whiteley’s seven-digit sales figure, relayed along the gossipy art grapevine, gave Smith pause for thought. The painting had once hung in the downstairs living room of the double-story terrace in Melbourne’s South Yarra where the two men lived for 14 years. So what was the other Whiteley, Interior with Screen and Avocado, now worth? The
Sidney Nolan
above the fireplace? The
Fred Williams
? The
Arthur Boyd
s? The stash of
Charles Blackman
s? The
Howard Arkley
s, so numerous Smith and Gould had taken to calling their home’s ground floor rear extension the “Howard Arkley room"?

Smith obtained an urgent court order preventing his ex-lover from selling any more paintings and hence began a six-year brawl through the courts for a $22 million bounty of fine art and dress circle properties. Their caustic lawsuit, played out in the Victorian Supreme Court, removed the layers of varnish from our commercial art scene and stripped back both men’s prestige.

Howard Arkley, OYO Flats. Bought by Smith at a Sotheby’s auction in 1994 for $11,500, setting a new record for the artist. Valued for the court case at $150,000.
AFR

At times it seemed as if a button had been pressed on mutually assured destruction: into the light came offshore bank accounts, fictitious buyers’ names, a client hoodwinked out of her prized family heirloom and a gaping breach of ethical standards at a pre-eminent public art gallery. Rather than air all this in public, both men surely ought to have settled. But if each was hoping the other would capitulate, they had miscalculated. Such is the power of art.

The provenance of this case and its never-to-be-repeated insight into the machinations of the Australian art industry can be traced to Smith. Now 44 years of age, he would tell the court that his love affair with Australian art had begun when he was six, with a great-uncle taking the young Geoffrey to auctions. Smith is now chairman of Sotheby’s Australia, having moved into art dealing after a rapid rise through the hierarchy at the National Gallery of Victoria. But when he met Gould, he was simply a 20-year-old university student. Gould, then 33, quickly surmised that he was “not just a pretty face".

In his first day of evidence as the first witness in their 26-day court hearing, Smith described the moment the pair met at an art auction cocktail party in 1990.

“Rob and I were introduced," Smith said, looking straight at the judge. “We started talking, we very sort of, very kind of, I don’t know how to describe it but it was kind of electric. We got along very well. We just, yes, one of those almost indescribable moments."

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Brett Whiteley, Bather in Garden. The painting sold by Gould in 2006, causing Smith to seek court orders preventing further sales of painting and kicking off the court case.
AFR

Within months the pair moved into a terrace owned by Gould in Park Street at South Yarra, a desirable address although an undesirable abode. To underline his rags-to-riches tale, Smith recalled the house being dirty, the smell appalling and, yes, it had been lived in by squatters.

“We made do. Times were tight, there was very little money and it didn’t really matter how salubrious the house was. We were together," he told the court.

Smith could have been talking about the state of Australia’s commercial art scene. In 1990 the recession was biting. The crash of the art market had arrived a year before at a Christie’s auction when the pass-in rate hit an all-time high. That auction had been an “absolute, unmitigated disaster", Gould told the court. The art market “basically fell over" and one commercial gallery was flogging Amway products to supplement its income.

At this time Gould Galleries sold paintings by
John Perceval
but had no other major Australian artists on its walls. No Drysdales, Boyds, Frederick McCubbins or
Arthur Streeton
s. Even the Percevals weren’t moving, despite an almost 50 per cent price knock-down. It was, said Smith, with all the politeness he could muster, “not first rank".

But just as Smith and Gould’s relationship bloomed, so did the art market, and so did Gould Galleries. By 2004, when the men’s relationship ended, Gould was selling works by the entire pantheon of local masters.

Gould himself attributed this to the “amazing generational changeover period" of the 1990s. The people who had bought works by Australian painters like Boyd, Nolan and Tucker around the middle of the century were either getting very old or dying off, so rare paintings were suddenly more available.

Smith saw matters differently and here we come to the nub of the court case. It was Smith’s unparalleled knowledge of Australian art, he claimed, honed through a lifetime of learning and a career at the NGV, which allowed Gould’s business to flourish. He was therefore entitled to a lot more of the spoils than he received from his former partner.

A Streeton had given them their first big break. In 1991, a painting titled Cremorne Point, Sydney Harbour failed to find a new owner at a Christie’s auction and Gould, thanks to some prompting by his young boyfriend, overcame his hesitation and bought it for $50,000.

“It was the most expensive purchase of an artwork we had made since we had been together and it was thrilling because it was a painting by my favourite artist from the great period in Streeton’s career," Smith told the court.

His study of Streeton meant he knew exactly how many paintings the artist had done of Sydney Harbour and how many were already in public galleries, allowing him to estimate that the painting was worth far more than the $50,000 price. The pair had it reframed, using the same moulds Streeton had used in the 19th century and then, a few months later, found a buyer in Hong Kong where cashed-up Australians, immune from the recession back home, were looking for things to buy. It sold for $120,000.

With Smith’s brains and Gould’s capital brawn, the pair made a lot of money. The young NGV curator found a Blackman work on paper called Christabel in a Chair. Bought for $9000, they sold it a few years later for $130,000.

While cataloguing the works of Boyd, Smith discovered two paintings, Wedding Group and Dreaming Bridegroom, had since the 1960s been owned by an American couple living in Philadelphia. Gould went to the US, bought them both for $100,000, kept one and sold the other for $330,000.

Their South Yarra home was renovated and filled with a collection of their most prized paintings. It was time to start thinking of their legacy. Gould rewrote his will to specify that on his death 31 artworks would be left to Smith and then, on Smith’s passing, to the NGV, each marked with a little plaque saying they had been “donated by Robert Gould and Geoffrey Smith".

“I suppose I wanted to preserve my immortality," Gould told the court. “I spent a lot of time in and out of museums and galleries around the world and I think about two of the most noted ways of being immortal is either that you are a great painter or you are a great patron."

The will was written up by Gary Singer, Gould’s long-term lawyer, friend and partner in numerous property investments. Later Melbourne’s deputy lord mayor, Singer had a habit of turning up, Justice John Dixon observed in his judgment with a metaphoric flourish, at every “exhibition opening of the Smith-Gould relationship". Once the will was signed, Smith and Gould set off on a holiday to London, Morocco, a spot of skiing in Chamonix and then a stay in Paris, with Singer dropping in on the final leg. Gould was about to be given reason to find a new lawyer.

Looking back, his relationship with Smith had been rocky for years. Sex was infrequent and, while Gould spent Saturdays working in his gallery, Smith spent them with Singer engaged in his second great love after art – hunting for real estate investments.

According to Gould, the denouement came in mid 2004. Sitting on their bed, as the figures in Boyd’s Wedding Group and Nolan’s Kelly in Armour silently looked on, Smith told Gould that he and Singer had been having an affair. “For how long has this been going on?" Gould asked but the younger man remained silent. A year? Two years? Three? Four? It was only when he reached the figure eight that Smith interrupted. “Not that long," he said.

Suddenly everything snapped into focus; Singer’s annoying appearance in Paris, the “footsies" under the table while the three were on holiday in the US, the endless hours Smith and Singer had spent, apparently looking for investment properties.

In the witness box Gould confessed to having been madly and deeply in love with Geoffrey, yet seven years of his life had been a lie. Perhaps out of residual affection, or a sense of owing him something, Gould helped set Smith up in his new life. He bought him a new apartment in a nearby street, gifted him a dozen paintings and even picked up the tab at David Jones for the exact same Royal Doulton tableware they had used together.

“He wanted to be kept in the manner to which I had certainly helped make him accustomed," Gould told the court.

But relations deteriorated. Smith sold the apartment that had been bought for him, angering Gould, who felt he had broken the terms of their separation. Gould sold the Whiteley and then, when Smith asked how much it had sold for, he lied about the sales price in a court document, saying it had sold for $1 million when the real figure was $1.5 million. Legal proceedings began.

For six long years Smith built his case that he was entitled to much more than the $3 million in assets he had left and sharpened his arrows to inflict maximum damage.

An early casualty in the crossfire was Smith’s own career at the NGV. His argument that he deserved more of Gould’s wealth because of the contribution he had made to his business sat uncomfortably with Smith’s day job as a senior curator at the NGV. Had Smith been looking for acquisitions for the NGV or his boyfriend’s business? Had he been trading on his job title to wow Gould’s customers into buying paintings? Had he misused his access through to NGV to artists and collectors to funnel business into Gould Galleries?

An investigation by the NGV into whether there had been code-of-conduct breaches was halted once Smith took his employer to court. Smith defended himself by pointing out that the NGV’s then director Gerard Vaughan and other curators had regularly come to his and Gould’s home, they knew what was hanging on the walls and knew the pair attended auctions together. Gould was “part of the NGV family", he said.

A confidential settlement would see Smith leave the NGV but this permeable boundary painted by Smith between his work at the NGV and his outside interests has never been fully resolved.

Then there was the pair’s approach to tax planning, every bit as creative as the works hanging on their walls. Gould had routed his purchase and sale of paintings through a company controlled by Singer called Goldcheck, which was carrying tens of millions of dollars in tax losses. Income earned by Gould from a sale was offset by Goldcheck’s losses and then, for a 5 per cent commission paid to Singer, Goldcheck would send the rest of the money to Gould via a “non-repayable loan."

As a result Gould consistently under-reported his gallery’s income for years – aided by computer systems which mysteriously kept deleting receipts.

The proceeds of painting sales from overseas were squirrelled back into the country via false names and false address. There is no “Hump Street" in NSW’s exclusive Whale Beach, but if Gould’s accounts were to be believed, it was where one of his clients, an “H. Schwartz", was living.

“It was considered a smart idea at the time to get the money back into the country," Gould ruefully told the court.

He would attempt to sheet the blame for his compromising tax affairs to his former accountant Phillip Dunn, who he claimed had often said he loved the art business because he could “put down almost any figures you like to work out how much tax you think you should pay".

This was denied by Dunn. Yet Gould would concede he had been investigated by the Project Wickenby taskforce into offshore tax evasion and had made a $1.3 million payment to the ATO in relation to previous year tax assessments.

The court also raked through Gould’s sales practices. Smith recounted how in 1998 he had expressed doubts about the authenticity of a group of works on paper purporting to be by Nolan. Gould sold them anyway.

In 2005, a woman named Alice Rouse, the niece of Russell Drysdale, sought Smith’s advice on how to sell a portrait of her by her uncle when she was a young girl. Smith, for a commission, told her to consign it to Gould, who was told not to sell for less than $250,000.

A few months later Rouse asked for the painting back, saying she had changed her mind, but Gould said he had found a buyer for $220,000 and Rouse sold. She wasn’t told that the buyer was in fact Gould himself. Six months later he onsold the work for $400,000, netting a $180,000 profit.

And so on to the judge, Justice Dixon, who, tired of the drawn-out court time consumed by the dispute, had taken to estimating the cost of the lawyers in paintings – first a couple of Nolans, then some Nolans, a Boyd and a Williams.

His 163-page judgment showed he was unimpressed with Gould’s conduct. Lying under oath about the sales price of the Whiteley had been “reprehensible". Notwithstanding Gould’s revised $1.3 million tax assessment the judge said he would swiftly hand the court file over to the ATO for further investigation.

“Mr Gould presented as a witness whose conduct out of court was of a kind that engenders deep suspicion of a witness’s commitment to the truth," Justice Dixon said.

Yet despite this savage critique the judge concluded Gould was a more reliable witness than Smith. Almost nothing Smith had claimed stood up to scrutiny. Gould Galleries had in reality enjoyed a strong reputation in prestige art before the 20-year-old uni student came along.

Gould bought that initial Streeton without any need for prompting by Smith. It was Gould who had tracked down his gallery’s more profitable finds – Blackman’s Christabel in a Chair, Boyd’s Dreaming Bridegroom and Whiteley’s Bather and Garden.

Smith had exaggerated his contribution, would “skite and boast" in the witness box and had made his own questionable use of the company Goldcheck in selling paintings given to him by Gould. The fact he had declined to call Singer as a witness did not help his claims that he had not been having an affair.

“Animosity, even vindictiveness, are known emotional responses between parties to a failed personal relationship. I am satisfied that there is evidence of such responses by each man," the judge ruled.

“The difference is that Mr Gould more readily conceded the nature of his behaviour when giving evidence, while Mr Smith maintained denials in the witness box that ultimately were not sustained."

For good measure, the judge added, he was “not persuaded that Mr Smith has attained the recognition, respect or distinction as an expert in 20th-century Australian art that warranted the epithets ‘eminent’ or ‘distinguished’." Smith was entitled to keep the $3 million in art and property with which he walked out of the relationship, but the rest of the $22 million prize pool would remain with Gould.

Had the couple been heterosexual, or had their relationship breakdown occurred after February 2009 when laws governing same-sex couples were changed, their case would have been heard in the Family Court where the media are not allowed to tread. Instead, it was heard in the public Victorian Supreme Court, giving a rare glimpse into the horrors played out when couples resort to the court to resolve their differences.

If there is one reason why the pair had failed to settle it is this: in the years after their relationship broke down in 2004 the art market boomed.

By 2007 it would hit its peak, with works by many artists achieving best-ever prices. The two men’s mutual hostility rose along with the value of the treasure trove of art they had assembled. As Australian art enjoyed its very best years, Gould and Smith endured their worst.

The collection once intended for the walls of the NGV instead will live forever in the annals of case law. Immortality has been indeed attained.

And with Smith lodging an appeal, the final chapter in this tale of love and love’s labour’s lost is yet to be written.